Rental Deposits

[laurejon]

This is another reason why it's fair to assume that landlords will beat FTB's back into the market when they feel confident, because they can get hold of cheaper money than FTB's can. Also a fair reason why BTL has still been buying when FTB's have pulled back, because the equation is different when a different IR is used.

I think it is also the case that the security offered by a BTL is far greater than the FTB's who have high gearing.

In addition vast majority of BTL's who would have weathered any storm would have the benefit and experience of recognising the trough long before the FTB's have the confidence to jump in with their first purchase by which time the horse would have bolted.

Another factor often overlooked here is that Banks will not lend diddly squat on property in the bad times, I know I tried their message was "We have closed the book on property". When the book re-opens the lending criteria is much stricter, C&G were notorius for their lending criteria in the late 90's up to 2001 as such many paid their fees for mortgage application which is several hundred quid and then were refused.

The problem once you are refused is that when you apply for a mortgage with another lender on their forms they ask if you have ever been refused for a mortgage, answer YES to this and you will be refused again losing your mortgage application fee once again.

Its a dead end once you have been refuses so my advice is get agreement in principle before you part with any dosh.

[Topher Bear]

Another reason these new upstart BTLs don't inform anyone, is that if they can claim residence for a while on the property, then it is established as their home and then when they convert to letting they can claim capital gains relief (ie no tax for first three years and then a reduced amount for a further 2 I believe it is). So its a tax avoidance dodge, and our landlady is on it big time....plus we know her lender...tis the same as ours :-) easy for them to check in that case, they will have two different names residing at the one address...but we'll have council tax bills to back up our claim of residency....we WILL be informing the bank and others when we leave, I assure you.

Key priorities in all businesses are

Hmm, these may make YOU money but...

1. Ltd Company

don't know the ins and outs of this

2. Dont use your own money

This is obvious if you can get away with it, which is easier said than done

3. Dont secure your own personal assets on the business

once again, obvious (maybe this is where ltd comes into it, creditors can't come after the directors personal wealth...even if they've bled the company dry!)

4. Pay your bills as late as possible

This is one of the biggest headaches for small businesses, and forces many to go under. Late payment of bills to new start companies which don't have much spare capital to pay for these periods and chase the late payers. Only for a few pounds extra interest payments. This is an extremely selfish practise which only goes to show the nastiness of those carrying it out

5. Tax avoidance at every corner

And who ends up paying for all this avoided tax? The rest of us normal citizens. By not paying up tax you are preventing money going into much needed public services. Another socially irisponsible practise which should be universally despised rather than praised for its "cleverness"

6. Dont ever...ever make a profit

Won't ever get any backing if you ever need it...you never know, your business might just hit a rocky patch, and if you've bled it for all it was worth in the good times, then when bad times come there will be nothing in the kitty to see you through, and no-one will be willing to lend money to a company which hasn't made a penny of profit in all its past years of trading.

Maybe this is why so many small companies go under...bad advice from greedy irrisponsible "business guru's"

Do the math     

<{POST_SNAPBACK}>

With business running like that, its no wonder the western world is going to the dogs and why we get boom and bust. You see, Capatilism fuels this kind of greed and manipulation to the detriment of others, and ultimately to the system. Pure capatilism may work, but its run by people who are too selfish to let it run its course so , like every other system of business or government, it will ultimately fail.

What has happened to the good old days of a gentlemans agreement. :angry:

[adamUK]

Hence the concept of two sets of books, one for the taxman and one for yourself.

<{POST_SNAPBACK}>

Is that what they call 'double entry book-keeping' okay..... just kidding.

[adamUK]

The concept of a business is for you to make a profit, not the business.

May I suggest a short course at your local college. I did just that and it certainly changed my views on how to run a business.

Key priorities in all businesses are

1. Ltd Company

2. Dont use your own money

3. Dont secure your own personal assets on the business

4. Pay your bills as late as possible

5. Tax avoidance at every corner

6. Dont ever...ever make a profit

Do the math     

<{POST_SNAPBACK}>

Depends on what you want to do with your business but for many it's to give you a tax-efficient and low (personal) risk vehicle for your investment capital. I am assuming you are a shareholder of your business so whatever profit the business makes is yours. If your business makes no profit then you get no return.

2) If you use other's cash they tend to want an equity stake or interest depending on the perceived risk of your venture. If you used your own cash then you would make your own return and effectively the return the lender would be seeking too - if your venture is so good then by all means use your own cash. Better you investing it than lending it to the bank (via your current or savings account) and having them make money from it.

3) Totally... jeez. Don't secure the business on your house - go Ltd or LLP.

4) As far as paying the bills as late as possible, it's common practice but you might also find your customers doing the same. Get interest payable on overdue invoices in the contract or introduce a performace bonus for those who pay on-time. It's amazing how this affects accounts-payable's attitiude. Though we are currently owed 100k and it's a pain-in-the-**** ringing up them to get the cash out of them (buggers they are)

5) I think the term you need to use is 'efficient tax planning'

6) If you want to pay yourself from dividends rather than salary (which incurs PAYE and both employers and employees NI) you must make an accounting profit since you can only pay dividend from profit and the taxman has recently tightened the rules up on this... Your overall tax burden will be lower this way unless you want to operate outside of the law...

[uro_who]

Dear Mr/Mrs/Ms Laurejon,

Might I make a minor point? Could you consider changing your post to read, 'do the maths'. It's just that one would hate for a passing reader to gain the impression that this was the Californian HPC forum.

Thank you in anticipation.

[Dee Monic]

And who ends up paying for all this avoided tax?  The rest of us normal citizens.  By not paying up tax you are preventing money going into much needed public services.  Another socially irisponsible practise which should be universally despised rather than praised for its "cleverness"

<{POST_SNAPBACK}>

Tax avoidance is a perfectly legitimate and above board thing to do. From the simplest thing like putting savings into an ISA upwards, people do have the right to arrange their affairs in a tax efficient way. It's tax evasion that's illegal. One thing this Labour government has done is blur the two by criticising tax avoidance and drafting bad legislation so the boundaries are not clear. It is this uncertainty that is damaging to small businesses.

[zzg113]

Tax avoidance is a perfectly legitimate and above board thing to do. From the simplest thing like putting savings into an ISA upwards, people do have the right to arrange their affairs in a tax efficient way. It's tax evasion that's illegal

The only difference between tax avoidance and evasion is that one is legal and the other not. They both spring from the same impulse. Whether it is "above board" or not is an entirely different matter. Anyone trying to paint an enormous distinction between tax evasion and avoidance is playing a game of frantic semantics; in practice they achieve exactly the same effect.